SIPPs And QROPS In The US

For many British expatriates living in the United States, one of the biggest financial questions is what to do with their UK pensions. Should they leave their pension in the UK, transfer it to a SIPP (Self-Invested Personal Pension), or move it to a QROPS (Qualifying Recognised Overseas Pension Scheme)?

The answer depends on several factors, including your residency status, retirement goals, and tax position. Both SIPPs and QROPS can be valuable retirement planning tools for UK nationals living abroad, but each comes with distinct advantages, limitations, and compliance considerations — particularly when you’re living in the US.

At Blacktower Financial Management, we’ve been helping expatriates make informed pension decisions since 1986. Here’s what every UK expat in the US should know about SIPPs and QROPS — and how to choose the right approach for your long-term financial security.

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1️⃣ Understanding SIPPs and QROPS

What is a SIPP?

A Self-Invested Personal Pension (SIPP) is a UK-registered pension that offers more control and flexibility than a standard personal pension. It allows you to:

• Choose from a wide range of investments (funds, shares, ETFs, bonds, etc.).
• Consolidate multiple UK pensions into one plan.
• Retain your pension in the UK but with greater control over how it’s managed.

SIPPs remain UK-regulated and subject to UK pension rules, including contribution limits, withdrawal conditions, and UK tax treatment.

What is a QROPS?

A Qualifying Recognised Overseas Pension Scheme (QROPS) is an overseas pension plan that meets specific criteria set by HM Revenue & Customs (HMRC). It allows individuals who have built up UK pensions to transfer them abroad, providing potential advantages such as:

• Greater flexibility in retirement.
• The ability to receive income and hold investments in multiple currencies.
• Protection against future UK legislative changes (such as tax or lifetime allowance limits).

However, not all expats are eligible — and not all QROPS are suitable, especially for US residents.

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2️⃣ SIPPs for UK Expats Living in the US

For British expatriates now residing in America, retaining a SIPP can be a sensible option.

Benefits of Keeping a SIPP:

• Simplicity: You retain your pension within the UK’s regulated environment.
• Global flexibility: You can manage investments online and access your SIPP from anywhere.
• Currency choice: Many SIPPs offer multi-currency functionality, helping reduce foreign exchange risk.
• No need for immediate transfer: If you may return to the UK or maintain UK assets, a SIPP remains practical.

SIPPs are particularly attractive for UK expats who:

• Intend to return to the UK in the future.
• Wish to preserve UK tax treatment on withdrawals.
• Prefer transparent fees and FCA-regulated protection.

However, SIPPs remain subject to UK pension legislation, which means withdrawals may still be taxed under UK rules.

In addition, American residents must be cautious about how the IRS treats SIPP income and investments — especially regarding potential taxation under US law. Working with a financial adviser familiar with both UK and US pension and tax systems is therefore essential.

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3️⃣ QROPS for UK Expats in the US

While QROPS transfers are popular for UK expatriates retiring to Europe or other offshore jurisdictions, they are generally not suitable for individuals residing permanently in the United States.

Why QROPS Are Challenging for US Residents

• US tax complications: The IRS does not recognise QROPS as a qualified retirement vehicle. This can result in US tax liabilities on growth, withdrawals, or even transfers.
• Double reporting requirements: Assets within a QROPS may trigger FATCA and FBAR reporting obligations.
• Limited jurisdiction options: There are no HMRC-recognised QROPS based in the US, meaning your pension would need to be transferred to a QROPS in another country (such as Malta), potentially complicating US tax reporting.

When QROPS May Still Be Relevant

For expats who plan to leave the US and retire elsewhere — such as in Portugal, Spain, or Malta — a QROPS can become an attractive option.

QROPS advantages include:

• Tax efficiency in certain overseas jurisdictions.
• Multi-currency investment and income options.
• Consolidation of multiple UK pensions into one international structure.
• Potential protection from future UK tax or regulatory changes.

The key is timing and jurisdiction — transferring to a QROPS while living in the US can create tax exposure, but moving one after relocation to a more QROPS-friendly country can be beneficial.

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4️⃣ Choosing Between a SIPP and QROPS

When deciding between a SIPP and a QROPS, consider:

Factor	SIPP	QROPS
Location of pension	UK	Overseas (e.g., Malta)
Regulation	UK FCA / HMRC	Overseas regulator (must be HMRC-recognised)
Currency flexibility	GBP (some multi-currency)	Multi-currency (GBP, USD, EUR)
UK tax treatment	UK rules apply	Depends on jurisdiction
US tax position	Typically simpler	Often complex and unfavourable
Best for	US residents, UK returnees	Expats retiring outside the UK/US

For most UK nationals living in the US, retaining or consolidating into a UK SIPP is usually more practical and compliant than transferring to a QROPS.

However, for those who expect to move elsewhere before retirement, a QROPS may still be worth exploring — ideally once non-US residency is established.

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5️⃣ Professional Guidance Is Essential

Both SIPPs and QROPS are powerful financial planning tools — but they carry complex tax, legal, and reporting implications, especially when living in the US.

At Blacktower Financial Management, our cross-border advisers specialise in helping UK expatriates:

• Review and consolidate UK pensions.
• Assess suitability of SIPPs vs. QROPS based on residency, retirement goals, and tax status.
• Create long-term strategies for global wealth, income, and estate planning.

We work closely with tax and legal professionals to ensure your pension decisions are compliant, efficient, and aligned with both UK and US regulations.

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Secure Your Retirement with Confidence

Whether you choose to retain a UK SIPP or explore future QROPS options, the key is forward planning and professional advice. With the right structure, you can manage your pension assets effectively, minimise tax exposure, and enjoy the retirement you deserve — wherever in the world you call home.

📞 Book your complimentary consultation today
Speak to one of Blacktower’s international pension specialists and take control of your UK pension planning while living in the United States.

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